Debt is a part of life for most Americans. But if you find yourself struggling to keep up, you may be worrying about what the next day or week could bring. Will you be able to pay your bills? How will you provide for your family’s needs? If debt has dimmed your financial outlook and made it difficult to see a way out in McKinney, it’s time to consider bankruptcy.
The seasoned bankruptcy attorneys of Toronjo & Prosser Law work with individuals and businesses in McKinney, Texas and surrounding areas. We understand the U.S. Bankruptcy Code, the exemptions that are specific to Texas, and how the law can help you out of your debt situation.
Understanding Bankruptcy in McKinney, Texas
Most people associate the word “bankruptcy” with financial ruin and failure. In reality, bankruptcy is fairly common in the United States. People from all walks of life, and businesses both small and large, have been faced with insurmountable debt. Circumstances beyond your control – from a bad economy to job loss to a major client that goes under – can make it difficult to pay your bills. Debt can start to pile up until it spirals out of control.
Bankruptcy is a possible solution. Unfortunately, there are many misunderstandings about it. Filing for bankruptcy doesn’t mean you can never recover and be successful again. And it doesn’t mean you have to give up everything you have. In fact, debtors can often keep most and sometimes all of their personal property after bankruptcy.
That doesn’t mean the decision to enter bankruptcy should be made lightly. There are benefits and drawbacks to bankruptcy, not to mention different types you might be able to file. Understanding bankruptcy requires professional legal counsel. You can expect nothing less from our law firm. We take the time to explore your individual or business debt, review your options, and explain how bankruptcy will affect you, your credit, and your financial future. We also discuss possible alternatives to bankruptcy that may be a better fit for you. Our objective is to find the solution that enables you to put the debt behind you and move on.
What Is Chapter 7 Bankruptcy in McKinney, Texas?
One popular type of bankruptcy is known as Chapter 7 or liquidation bankruptcy, available to both individuals and businesses. When you file for Chapter 7, a bankruptcy trustee will be assigned to your case. The trustee’s objective is to sell off as many assets as possible to pay down as much debt as possible. Chapter 7 is especially helpful for debtors with unsecured debt – meaning, debt that is not backed by any collateral. For example, you may choose Chapter 7 to take care of:
- Credit card bills
- Medical bills
- Utility bills
- Unsecured court judgments
- Collection agency debts
- Personal loans
Although Chapter 7 requires the debtor to sell off property to clear the debt, there are exemptions. These exemptions include small items like furniture, clothing, and household appliances. In some cases, homes and vehicles up to certain limits may also be exempt.
To be eligible for Chapter 7 bankruptcy, the debtor must meet applicable income limits. In Texas, that means the household income must be lower than the state’s median income. If your income is higher than this amount, you have to pass a means test that will evaluate the amount of your debt and disposable income.
Individuals who complete the Chapter 7 process may have certain debts discharged, but businesses will not. Instead, the business will need to close and any remaining assets will have to be used to pay off debt.
What Is Chapter 13 Bankruptcy?
Individuals who don’t qualify for Chapter 7 bankruptcy may be able to use Chapter 13 instead. Known as reorganization bankruptcy, Chapter 13 helps the debtor by reorganizing and paying down the debts instead of liquidating assets. Note that Chapter 13 bankruptcy is for individuals and married couples, not businesses.
Under Chapter 13, the debtor proposes a repayment plan on a term of 3-5 years. If the debtor follows this plan and makes all payments required under it, the bankruptcy will be discharged. That means the successful filer can usually keep his or her property, unlike with a liquidation bankruptcy.
A bankruptcy trustee is assigned to your case, just like with Chapter 7. That individual, along with creditors and the judge, will have to review your proposed repayment plan. If the debtor misses payments, creditors may be allowed to resume collections. An attorney can make sure the repayment terms are both fair and feasible for the debtor.
What Is The Automatic Stay?
Whether you file for Chapter 7 or Chapter 13 bankruptcy, the court will enter what is known as an automatic stay. This is one of the most important protections offered by bankruptcy because it prevents creditors from collecting from you. That means creditors cannot initiate or continue such collection efforts as:
- Collection letters and calls
- Creditor lawsuits
- Foreclosures
- Repossessions
- Wage garnishments
Creditors that violate the automatic stay can be penalized. However, they do have the right in some cases to ask for the stay to be lifted.
How Can Toronjo & Prosser Law Help Me?
When you retain Toronjo & Prosser Law, we get to work right away in reviewing your debt along with other important factors like income. This helps us determine whether bankruptcy is the right choice for you or if an alternative might be better.
In helping you choose between Chapter 7 and Chapter 13, we take the time to understand your goals and concerns. For instance, if you want to keep as much of your property as possible, Chapter 13 may be best. On the other hand, if you’re looking for the quickest option, you might want to file Chapter 7.
We work with you each step of the way and answer any questions you have about the bankruptcy process. We also take legal action against creditors who violate your rights and contest any effort to lift the automatic stay. Finally, we will evaluate any risks that could cause the bankruptcy to be dismissed.
Our mission is to serve our clients with the experience, compassion, and dedication they deserve. If you’re ready to get started on your bankruptcy today, call Toronjo & Prosser Law.